Economics & Development

This statement, delivered by Jim Chalmers, Treasurer of Australia, on behalf of the constituency comprising Australia, Cambodia, Kiribati, the Republic of Korea, the Marshall Islands, the Federated States of Micronesia, Mongolia, Nauru, New Zealand, Palau, Papua New Guinea, Samoa, Solomon Islands, Tuvalu, and Vanuatu, to the 113th Meeting of the Development Committee on April 16, 2026, addresses the uneven global economic recovery amid persistent geopolitical tensions, supply‑chain disruptions, and heightened vulnerability to external shocks. It highlights the disproportionate impact of rising commodity prices, fuel shortages, and trade disruptions on small states and Pacific Island countries, which are particularly exposed to oil price volatility, climate shocks, and humanitarian pressures. The statement supports rapid deployment of the World Bank Group’s crisis response toolkit while emphasizing the continued importance of a medium‑ to long‑term development focus aligned with climate resilience and sustainable growth. It strongly endorses the World Bank’s Jobs Agenda and the Development Committee paper on creating an enabling environment for more and better‑paid jobs, stressing the need for predictable and well‑functioning regulatory systems, effective institutions, and integration of public and private solutions. The statement underscores the importance of strong safeguards, quality procurement, and operational effectiveness, particularly in small states, alongside targeted capacity building and simplified approaches. It welcomes the Small States Strategy as a framework for more agile and tailored engagement, and reaffirms the centrality of climate action, skills development, and inclusive growth in ensuring resilience, stability, and improved livelihoods across the constituency.

Following the 0.5 percent contraction in 2025, growth is projected at 0.9 percent in 2026, supported by the resumption of the Mozambique Liquefied Natural Gas (LNG)–TotalEnergies project. The recovery remains fragile amid fiscal pressures, foreign exchange shortages, and flood-related disruptions. Poverty is projected to stay high at 82 percent, amid weak non-extractive growth and limited job creation, with risks from climate shocks, fiscal slippages, and insecurity.

Estimated GDP growth declined to 4.2 percent in 2025, as extractive output and gas investment declined. Lower inflation and stronger agricultural growth reduced poverty to 25.2 percent. Fiscal and external balances improved, underpinned by initial gas revenues, elevated gold prices, and new fiscal measures. Growth is projected to rebound to 4.4 percent in 2026, as rising gas output and high commodity prices offset import price pressures from the Middle East conflict.

GDP growth moderated to 3 percent in 2025, driven mainly by textiles and services, while the political crisis in late 2025 weighed on economic activity. Growth is projected to average 4.2 percent over 2026–28, supported by public and private investments. Extreme poverty is expected to remain high at around 65 percent. The outlook is subject to downside risks, including institutional fragility, slow reform implementation, and vulnerability to external shocks.

Gambia’s economy grew at a robust 5.9 percent in 2025 across sectors, while inflation continued to moderate, supporting higher labor income and a decline in poverty to 20.3 percent. Growth is projected to slow to 5.3 percent in 2026 amid continued fiscal consolidation and conflict-related shocks in the Middle East. Risks from debt vulnerabilities and lower development assistance cloud the outlook.

Real GDP growth recovered strongly from the 2024 El Niño induced drought to an estimated 7.5 percent in 2025. Improved macroeconomic stability, productive harvests, rising remittances, and mining growth (anchored by high global mineral prices) support the economic recovery and a robust near-term growth outlook. The poverty rate declined slightly in 2025 on the back of the economic growth driven by the agriculture sector.

Armenia recorded solid economic growth of 7.2 percent in 2025, driven by strong private consumption and investment. Average inflation reached 3.3 percent in 2025, slightly above the CBA’s target. Growth is expected to moderate over the medium term. While the conflict in the Middle East could weigh on growth in 2026, progress towards durable peace with neighboring countries would support stronger growth prospects in the medium term and beyond.

Growth is resilient but has increasingly relied on short-term stimulus rather than productivity gains. With global investors reassessing Indonesia’s market transparency and the predictability of the policy mix, sustaining growth needs productivity-enhancing reforms that deliver better jobs at scale: deregulation, financial sector deepening, and investment and trade openness. These, alongside strengthening fiscal and monetary anchors, are key to achieving 2045 Vision.

Growth remained resilient in 2025, supported by policy measures and exports, even as domestic demand stayed subdued. Growth is projected to moderate to 4.2 percent in 2026. Headwinds include cautious consumer spending, ongoing property sector adjustment, and the conflict in the Middle East. Poverty reduction is expected to continue at a slower pace in line with moderating growth.